Lionsgate Fiscal Q1 Earnings Slammed By Marketing And Interest Expenses

Lionsgate shares are down about 3.4% in after-hours trading after it surprised investors by reporting a net loss for the quarter that ended in June. The independent studio lost $44.2M, down from a $10.3M profit last year, on revenues of $471.8M, +80.6%. Revenues exceeded the Street’s forecast of $447.3M. But the loss of 33 cents a share contrasts with the consensus forecast for a 9 cent profit. The company says that the operations are doing just fine with strong returns from The Hunger Games, Cabin In The Woods, and What To Expect When You’re Expecting as well as — surprise! — “strong revenue gains from the Company’s home entertainment business.” Motion picture revenue was up 111% to $406.5M. That includes theatrical sales of $137.6M, up fivefold, and TV revenue of $37.1M, -14%. Home video sales also were up fivefold to $137.6M.  Meanwhile, TV production revenue was -5% to $65.3M as home video sales from the 6th and 7th seasons of Weeds and the 5th season of Mad Men didn’t outweigh the drop in the number of syndicated shows. But Lionsgate spent $90M more on marketing this year as it promoted five film releases vs just one in the same quarter last year. All of the films “are anticipated to be profitable on an ultimate basis,” the company says. The earnings statement also says that costs for stock-based compensation soared due to the increase of Lionsgate’s trading price (+59.3% so far in 2012). In addition, the company shouldered expenses to integrate Summit Entertainment, which it bought this year. And it had to pay interest on the part of the Summit term loan debt that it retired early. With “two-thirds of the profitability of the first Hunger Games film still ahead, we anticipate that the combined benefits of our Summit acquisition, the strength of our young adult franchises, and the continued evolution of our television business will translate into significant and growing contributions for the balance of our three-year plan,” CEO Jon Feltheimer says. Lionsgate will talk to analysts about earnings tomorrow morning.

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